The Price of a Basket of Goods in 2000 Was

question 60

Multiple Choice

The price of a basket of goods in 2000 was $500. If the same basket cost $600 in 2002, identify the correct statement from the following.

• A) The price index in 2002 must have been 100 points higher than in 2000.
• B) The price increase between 2000 and 2002 was 10%.
• C) If 2000 is considered the base year, then the price index in 2002 must have been 120.
• D) If 2002 is considered the base year, then the price index in 2000 must have been 70.

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Definitions:

Put Options

A financial contract granting the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified timeframe.

Break-Even Price

The market price that an asset must reach for an investor to recover their initial investment without making a profit or loss.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specified time.

Premium

Premium often refers to the additional cost above the normal or nominal amount, in contexts such as insurance payments, above-par bond prices, or the price paid for options contracts.